5 Costly Mistakes That Made Me Lose 90 Lacs in Real Estate
5 Costly Real Estate Mistakes That Costed Me 90 Lacs
"Don’t wait to buy real estate, buy real estate and wait," said by Will Rogers, and this quote fits perfectly into my story. My experience is a cautionary tale for those who ignore the potential of real estate investment.
In this blog, I will share my personal journey that not only shows how foolish I was but also how research could have been the weapon to save me from making huge blunders. Today, I will outline 5 critical mistakes that made me lose 90 lacs and why you should never…
How It all started?
In 2007, after my grandparents passed away, my father and I decided to sell a piece of land in Bihar. The decision was made because we planned to move to Delhi permanently and needed the funds to support that move.
We sold 300 gaz (2 kattha) of land located in a prime area for 15 lacs. Given the location, selling it for such a high price at that time wasn’t difficult. With the 15 lacs, we bought an independent house in Faridabad, a part of Delhi-NCR, and settled down.
13 Years Later...
Fast forward to 13 years later, and life had been going well for us until one evening when my uncle came over for dinner. As we were casually chatting, the topic of real estate came up.
To my shock, my uncle mentioned that a piece of land in our native place had recently sold for 1.05 crore. We asked for more details, and he revealed that it was the same land we had sold for 15 lacs all those years ago. My uncle had no idea that this plot of land had belonged to us, and we were stunned.
That news left my father and me traumatized.
My Uncle’s Reaction
When we told my uncle about the situation, his reaction was blunt and unforgiving. He looked at us as if we had committed an unforgivable crime. "Are you both fools?" he asked. "Why did you sell such a premium piece of land?"
We explained our situation to him, but he couldn’t believe we sold that property. "You could have sold other land in underdeveloped regions, but why sell this prime land, especially when it was undervalued?" he asked.
We had no answers. That night, he gave us some valuable advice, which I want to share with you now so that you don’t make the same mistakes.
5 Things You Should Never Do in Real Estate
1. Never Sell Your Property Without Assessing Its Value
One of our first mistakes was that we didn’t properly assess the value of our property. Our land was in a prime location, surrounded by big markets, highways, and close to railway and bus stations. We didn’t consider its future potential and instead focused on immediate liquidation.
Lesson: Always evaluate the future potential of your property, not just its current value. Research the development plans in the area and understand how they may affect the value over time.
2. Never Sell Your Property in a Hurry Without Exploring Other Options
Our uncle suggested that we could have explored other options, such as taking a bank loan. If we had taken a loan of 15 lacs back then at an interest rate of 12%, we would have paid approximately 29 lacs (including principal and interest). By doing so, we would have saved around 75 lacs.
Lesson: As Indians, we often avoid loans due to a lack of financial literacy, and this led us to make an emotional, hasty decision. Exploring alternatives like loans could have helped us preserve our wealth while still making our move.
3. Never Let Your Emotions Influence Your Financial Decisions
Our decision to sell the land was largely driven by emotions. We were in a transition period, moving to Delhi and seeking quick cash to facilitate our relocation. Emotions clouded our judgment, and we failed to consider the long-term financial benefits of holding onto the property.
Lesson: Always keep emotions in check when making financial decisions. Real estate decisions should be based on logic, not the immediate desire for cash or convenience.
4. Never Ignore Expert Advice Just to Save Some Money
We didn’t consult with any real estate experts or financial advisors before making the decision to sell. Our lack of professional guidance led to a rushed decision without fully understanding the market’s potential.
Lesson: Expert advice is invaluable in real estate. It may seem like an additional cost, but the insights and guidance you get can save you from costly mistakes in the future.
5. Always Liquidate Your Property in Regions With No Further Potential for Appreciation
We sold our land in an area that had a lot of potential for growth. If we had kept it, the value would have gone up a lot. Our mistake was that we sold it in a place that still had a lot of room to grow, and we didn’t realize that. Instead, we should have sold land in areas where there was no more chance for growth and invested that money in places like Faridabad, where there was more potential. But, we did the opposite.
Lesson: Always think about the future of the area where your property is. If the area has room to grow, keep the property. If it's in a place with no chance of growth, sell it and invest somewhere better. It’s always smart to ask experts for advice when making these decisions.
My final thoughts…
Looking back, I lost 90 lacs—not just in the sale of the land but in missed opportunities. If I had been more patient, done thorough research, and sought expert advice, I could have avoided this massive financial loss.
Real estate is a long-term investment, and it’s crucial to understand the market dynamics. As Will Rogers wisely said, “Buy real estate and wait.” Don’t make the same mistakes I did—take the time to assess, consult experts, and make informed decisions. Real estate can be a powerful wealth-building tool, but only if you approach it with the right mindset and preparation.
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